If you want to own a business, but buying an existing one doesn’t sound right for you. Or starting from scratch sounds a bit intimidating. Franchise ownership could be exactly what you’re looking for. But what is a franchise?
A franchise is a licensed partnership that allows the business owner to use the corporate name and operations. In exchange, the corporate owners ask for a small percentage fee from the franchisee. There are many benefits for all parties involved, and franchising can make business ownership attainable for a wide range of candidates.
Some well-known franchises include McDonald’s, Great Clips and Planet Fitness. Contrary to popular belief, franchises are not limited to fast-food restaurants and range across many different industries. There are over 745,000 franchises operating nationally, and that number continues to grow. For example, Cypress Pointe Cremation is one of the only franchises operating that focuses on cremation in the United States.
- Franchisor: Corporate owners. These individuals own the brand and the name. They collect franchise fees and royalty fees. The franchisor provides training, operational support, business development resources, site selection assistance, marketing and advertising support.
- Franchisee: Independent owner. This is you, the business owner. The franchisee has autonomy over the day-to-day of the business.
- Franchise Agreement: A legal document that lays out the obligations of both the franchisor and the franchisee. It is an important part of the franchising process that helps franchisees understand the historical financial performance and system growth of the franchise brand.
- Franchise Fee: A one-time fee paid by the franchisee allows them to use the brand’s name, products, operations and any other proprietary processes.
- Royalty Fee: A fee paid either on a monthly, quarterly, or annual basis. This payment is usually calculated as a percentage of the franchisee’s gross sales.
- Unit/Multi-Unit: A unit is a single franchise location. A multi-unit owner owns 2+ locations of a franchise.
Benefits of Franchising
There are benefits for both franchisor and franchisee in launching new franchises and locations. Franchising allows franchisors to grow their business without adding on the day-to-day workload of a new business. They can oversee an operation rather than each individual store, and devote additional time to expansion and operational growth.
Franchisees can use a tried and true system to launch their business and decrease chances of wrong turns. Franchisees aren’t just paying for a name they also get the successful processes. This also creates opportunities for franchisees to enter new industries they may not have experience in. For example an entrepreneur can go from a corporate job to owning a coffee shop due to a franchise model. It’s beneficial to both parties to get involved in franchising.
Once an entrepreneur chooses a franchise, there is an application process and, once approved, a franchise agreement will be drafted and the franchise fee will be paid. Corporate will help with startup and sometimes even finding a location. As the franchisee’s business grows, each year they pay royalty fees to the franchisor. With enough success the franchisee will open another location and become a multi-unit owner.
If you’re interested in joining a growing cremation franchise brand, call Cypress Pointe Cremation directly at 618-741-7835, or contact Joe@cypresspointecremation.com.
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